Arko Corp. (NASDAQ:ARKO) Q4 2022 Earnings Conference Call February 28, 2023 10:00 AM ET Company Participants Ross Parman - VP, IR and Government Affairs Arie Kotler - Chairman, President & CEO Donald Bassell - CFO Conference Call Participants Alok Patel - Stifel Karru Martinson - Jefferies William Reuter - Bank of America Anthony Bonadio - Wells Fargo Securities Operator Greetings, and welcome to the Arko Corp. Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. At this time all participants are i ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-39828 ARKO Corp. (Exact Name of Registrant as Specified in Its Charter) ______________________________________________ Delaware 85-27 ...

Arko Corp. (NASDAQ:ARKO) Q3 2022 Earnings Conference Call November 8, 2022 10:00 AM ET Company Participants Ross Parman - VP, IR and Government Affairs Arie Kotler - Chairman, President & CEO Donald Bassell - CFO Conference Call Participants Bobby Griffin - Raymond James Anthony Bonadio - Wells Fargo Securities Mark Astrachan - Stifel Nicolaus & Company Operator Greetings, and welcome to the Arko Third Quarter 2022 Financial Results Call. At this time all participants are in listen only mode. A question an ...

Financial Data and Key Metrics Changes - Arko Corp. generated $31.8 million in net income, an increase of over 24% compared to the prior year's second quarter [9] - Adjusted EBITDA reached $79 million, marking a 4.4% increase year-over-year [25] - Merchandise margin increased by 170 basis points to 30.4% from 28.7% in the second quarter of 2021 [21] - Total liquidity as of June 30 was approximately $727 million, including cash and cash equivalents of approximately $282 million [17] Business Line Data and Key Metrics Changes - Total fuel gross profit was $130.8 million, a 15.1% increase compared to $113.7 million in the second quarter of 2021 [11] - Same-store merchandise sales, excluding cigarettes, increased by 5.7% on a two-year stack basis [10] - Retail fuel profitability, excluding intercompany charges, grew 15% to $13.7 million compared to Q2 2021 [22] Market Data and Key Metrics Changes - The company maintained total market share and grew total store dollar sales despite historic volatility and inflation [10] - Fuel margin cents per gallon for supply locations increased to $0.072 per gallon, a 28.6% increase compared to the prior year [22] Company Strategy and Development Direction - The company is focused on executing its long-term growth strategy, including investments in store remodels and new product offerings [9][12] - Arko is pursuing an active acquisition strategy, having completed 21 acquisitions in less than 10 years, with a robust deal pipeline currently available [16][59] - The company is investing in EV charging capabilities and has installed Level 3 fast chargers at select locations [17] Management's Comments on Operating Environment and Future Outlook - Management noted that higher fuel prices led to lower volumes, but the strategy focused on optimizing margins [31] - The company is confident in its ability to deliver future value to stockholders and is excited about the second half of the year [28] - Management highlighted the resilience of the convenience store industry, which has historically grown during recessions [16] Other Important Information - The company declared a quarterly dividend of $0.02 per share to be paid on September 12, 2022 [26] - The company repurchased 3.1 million shares of common stock at an average price of $8.65 for a total of $27 million [27] Q&A Session Summary Question: Retail gallon same-store sales decline and internal expectations - Management acknowledged that higher prices led to lower volumes but emphasized the focus on optimizing margins [31] Question: Opportunities for wholesale growth - Management indicated that wholesale accounts faced similar challenges as retail, but volume trends improved as prices declined [33] Question: Impact of inflation on merchandise prices - Management confirmed that price increases were observed, but they managed to remain competitive while increasing promotions [34] Question: Balancing gallon decline versus inside store business - Management stated that they maintained in-store market share and saw increased profitability despite gallon declines [39] Question: Store operating expenses and personnel costs - Management explained that the increase in personnel costs was due to higher wages and additional hours worked [41] Question: Expected savings from restructuring - Management expects a minimum of $0.5 million in annual savings from the restructuring [44] Question: Fuel margins and sustainability - Management noted a correlation between declining fuel prices and increased driving, which positively impacts sales [48] Question: Drivers of heightened retail fuel margin - Management discussed the impact of increased costs due to inflation and credit card fees on overall margins [54] Question: M&A landscape and valuations - Management indicated that the acquisition pipeline is active, with opportunities arising from smaller chains struggling in the current environment [59][62]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2022 was $50.1 million, an increase of 18.4% compared to the prior year period [8][22] - Total revenue, including fuel, was $389.3 million, a 2% increase from the prior year [19] - Net income improved to $2.3 million from a loss of $14.7 million in Q1 2021 [22] - Merchandise gross margin increased to 29.5%, up 210 basis points from the prior year [10][19] - Retail fuel margin increased to $37.50 per gallon from $32.10 in the prior year [19] Business Line Data and Key Metrics Changes - Same-store merchandise sales, excluding cigarettes, increased by 9.3% on a two-year basis [9] - Retail fuel gallons sold grew by 5.9% compared to the prior year [10] - Same-store fuel gross profit increased by $9.7 million, excluding intercompany charges [10] - Merchandise margin dollars increased by $9.7 million versus the prior year [19] Market Data and Key Metrics Changes - Same-store fuel volume decreased by 3.1% [19] - Customer count at a remodeled store increased by 50%, with gallons sold increasing by 112.7% [12] - Same-store sales, excluding cigarettes, increased by 94% at a specific remodeled store [12] Company Strategy and Development Direction - The company is expanding its offering of lower-priced items, such as pizza and fresh coffee, to cater to price-sensitive consumers [9][50] - Plans to open a total of 50 Savara franchises in 2022, with two opened in Q1 [11] - The company is committed to organic growth initiatives, including remodels and new store openings [10][14] - The acquisition of Quarles Petroleum is expected to close in Q2 or early Q3 2022, expanding operational segments [14][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic environment is characterized by increased price sensitivity due to inflation and rising fuel prices [9][50] - The company believes it is well-positioned for long-term success despite market challenges [24] - Management expressed confidence in the effectiveness of their loyalty program, which has nearly 600,000 opt-in members [13] Other Important Information - The company declared a quarterly dividend of $0.02 per share, payable on June 15, 2022 [23] - The company repurchased approximately $12 million worth of shares under its repurchase program [23] - Total liquidity as of March 31, 2022, was approximately $744 million [18] Q&A Session Summary Question: Can you provide more detail on the remodel referenced? - The remodel involved a full raise and rebuild of store 3894, increasing its size from 3,500 to approximately 5,600 square feet, and took less than a year to complete [27] Question: When will the pace of remodels increase? - The company plans to complete a total of nine remodels and is focusing on learning from recent results to increase the pace [30] Question: How have rising gas prices affected customer behavior? - Management observed that customers are making more frequent trips to fill gas due to higher prices, but this has not significantly impacted in-store sales [35] Question: How are same-store wages and credit card fees tracking? - Same-store credit card fees increased by about $3 million compared to Q1 2021, while personnel expenses were slightly below expectations [38][39] Question: What is the company's strategy regarding pricing in a price-sensitive environment? - The company is focusing on offering lower-priced items and adjusting its product mix to meet consumer needs during economic downturns [50][51]